Question About Today’s Real Estate?
Are short sales quicker the second time around?
My husband and I have been looking at homes for about six months. Because of all of the horror stories we have heard, we have tried to avoid short sales. But there are so many out there and we saw one we really liked. It is being advertised that the short sale has already been approved for a previous buyer who cancelled escrow. What should we look out for?
Why did the first buyer cancel escrow? Was it that they just got tired of waiting? Or during an inspection did they learn that the home’s condition was worse than anticipated? Ask the Realtor if any inspections were performed and if so, ask for a copy.
As the short sale was already approved, the reapproval will likely be quicker than starting from scratch. When a short sale is approved the investor approves a dollar amount that the investor must receive. Escrow will calculate closing costs such as commissions, escrow and title fees, tax prorations, etc. The investor will also give a deadline for closing.
Always ask for a copy of the written short sale approval. Review the short sale approval with escrow to verify that the net to the investor will allow for the commissions, escrow, title, property taxes and other fees to be paid. When I represent buyers, I typically don’t have them pay for a property inspection or appraisal until I receive a copy of the written short sale approval.
Each short sale is different. Short sales are generally sold as is; the seller/investor will generally not make repairs. But in the event of major hidden defects you might try to renegotiate with the seller/investor/lender. It is doubtful that the investor is going to allow a renegotiation over leaky plumbing or an old roof. But if you learn that the chimney is cracked and it will be $15,000 to rebuild, you might try renegotiating.
Although it is customary that Los Angeles homeowners provide Section I termite, I have yet to see an investor approve termite costs. You may consider asking the short sale lender to pay for a percentage of your closing costs; sometimes they will.
Although the short sale was previously approved for a specific dollar amount, now that the original buyer has cancelled the investor may approve a lower offer.
Phyllis Harb is a Realtor with Prudential California Realty.
She may be contacted at (818) 790-7325 or by email AskPhyllis@Realtorharb.com.